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# Re: st: Reverse Causation Solutions?

 From Suryadipta Roy To statalist@hsphsun2.harvard.edu Subject Re: st: Reverse Causation Solutions? Date Fri, 21 Jun 2013 12:13:11 -0400

```There are a variety of techniques to address the statistical problem
Austin Nichols available here:
http://www.stata-journal.com/article.html?article=st0136
to have an idea about the umbrella of identification issues of which
reverse causation is one. For example, you may use a Two Stage
Least squares method for this purpose. The paper will tell you about
most of the important methods in practice.

Best wishes,

On Thu, Jun 20, 2013 at 12:18 PM, Mai Anh Ngo <maianh.ngo@gmail.com> wrote:
> I have a problem of reverse causation in my regression model for a
> panel data set with unobserved heterogeneity. My regression equation
> is as follows:
>
> Y1it = a + b*Y2it + c*Xit + ui + eit
>
> where Y1it and Y2it are binary and it is suspected that there is
> possibly reverse causation from Y2it to Y1it or from Y2i,t-1 to Y1it
>
> I could not find a good instrument to use the instrumental variable
> method and I am thinking of estimating a bivariate model:
>
> Y1it = a + b*Y2it + c*Xit + ui + eit
>
> Y2it= d +e*Y1it  +  f*Zit + vi +  rit
>
> where the error term eit and rit are allowed to be correlated.
> However, I was told that in general, a bivariate model would not solve
> reverse causation/simultaneity problem. Is that true?
>
> What are the methods that can be used to solve reverse causation or
> simultaneity problem?  Thank you for your consideration.
>
> Mai Ngo
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```